Lloyds Luxuries Ltd Management Discussions

GLOBAL ECONOMY

The burgeoning beauty and cosmetics industry is poised to drive the expansion of the professional beauty services market in the coming years. This dynamic sector encompasses a wide array of personal care products, including skincare, color cosmetics, hair care, and fragrances, as well as services offered by salons and day spas. Professional beauty service providers are integral to this industry, offering specialized treatments such as hair care, facials, nail care, and makeup applications. Their expertise and training elevate the overall beauty experience, contributing significantly to the industrys growth and evolution.

For instance, in June 2023, according to the National Hair and Beauty Federation, a UK-based trade association for hairdressing, barbering, and beauty salon owners, between March 2021 and March 2022, the number of hair and beauty firms in the UK rose by 2,215, reaching 48,425 businesses. Further, in 2020-2021, the hair and beauty sector generated USD 5.9 billion in revenue.The global salon services market size was valued at USD 215.65 billion in 2022 and is projected to grow from USD 230.64 billion in 2023 to USD 383.88 billion by 2030, exhibiting a CAGR of 7.55% during the forecast period. Europe dominated the salon service market with a market share of 31.55% in 2022.

Technological advancements are revolutionizing the professional beauty services market. Leading companies are adopting innovative tools like digital hair color processors, LED light therapy, and ultrasonic facial devices to elevate service standards. Salons are also utilizing sophisticated CRM software, AR-powered virtual try-on tools, and AI-driven skincare analysis to enhance client experiences and provide personalized services. Additionally, the integration of eco-friendly technologies, such as energy-efficient equipment and water-saving devices, is meeting the rising demand for sustainable beauty solutions.

By embracing these technological advancements, professional beauty service providers are not only staying competitive but also setting new standards in the industry. The fusion of technology and beauty is redefining client expectations and pushing the boundaries of what modern salons can achieve.

INDIAN ECONOMY

Indian Beauty Salon Market was valued at USD 11.65 Billion in 2024 and is expected to reach USD 22.99 Billion by 2033, at a CAGR of 7.85% during the forecast period 2024 - 2033. The beauty industry is booming, particularly among urban Indian consumers, attracting national and international brands.

The industry, valued at Rs. 80,000 crore and growing at a 10% CAGR, is seeing a rise in new services like nails and male grooming, along with increased consumption of home care products, reflecting changing consumer preferences and growth prospects. Indias beauty industry holds considerable potential for further growth and expansion, with the professional hair care market alone valued at Rs. 2,100 crore. The mens grooming market in India, currently at $900 million, is expected to reach $1,900 million by 2029. As consumer spending surges to $296 billion (Rs. 24.6 lakh crore). The per capita gross income of Indian consumers is anticipated to rise by 138% in real terms from 2021 to 2040, expanding disposable income and creating ample opportunities for beauty brands.

The growing demand for international beauty products is fueled by the rise of e-commerce channels and their integration with physical stores, with social media significantly shaping consumer preferences. India has transitioned from a consumer to a leader in the beauty and cosmetics industry, with the world now looking to India as a pioneer. India is on track to become the worlds third-largest consumer market by 2027.

INDUSTRY OVERVIEW

The salon industry is undergoing a dynamic transformation, driven by increased consumer demand for diverse and personalized beauty services. This sector encompasses a wide range of services, including haircuts, styling, coloring, skincare, nail care, and wellness treatments, catering to a broad demographic. The industry also benefits from trends like the "experience economy," where clients seek unique, high-quality, and holistic salon experiences. Overall, the salon industry is flourishing, marked by innovation, expanded service portfolios, and an emphasis on customer-centric experiences.

The mens grooming industry has experienced a significant transformation over the past years, driven by a growing interest in self-care and personal appearance. Traditionally, grooming products and services were primarily targeted at women, but there has been a notable shift as men increasingly prioritize their grooming routines.

This change is particularly evident among younger demographics, such as millennials and Gen Z, who are more influenced by social media, celebrity culture, and evolving beauty standards. These age groups are more open to experimenting with various grooming products, from skincare and haircare to beard care and fragrances. However, the trend is not limited to the younger generation; older men are also becoming more conscious of their grooming habits, seeking products and services that cater to anti-aging, skincare, and overall well-being from head to toe. This expanding interest across different age groups has led to a diversified market with a wide range of products and services designed to meet the specific needs and preferences of men, making the mens grooming industry one of the fastest-growing sectors in the beauty market.

The expansion of beauty salons into tier II and III cities in India is a significant market growth driver, driven by the ongoing urbanization trend and evolving consumer preferences. As urbanization extends beyond metro cities, smaller urban centres are witnessing a surge in demand for professional beauty services.

By setting up franchises in tier II and III cities, these salon chains are not only meeting the growing demand but also reshaping consumer expectations. They offer affordable yet high-quality beauty services, catering to a demographic that seeks modern grooming experiences without compromising on quality.

This expansion reflects a shift in the beauty industrys landscape, with smaller cities becoming integral to market growth and competitiveness. The presence of renowned salon brands in tier II and III cities contributes to the normalization of professional grooming services in these areas, thereby further stimulating market demand."

Industry Overview: Opportunities

In the ever-evolving landscape of Indias salon market, the key to success lies in the realms of customization and personalization. This strategy not only enhances customer satisfaction but also builds enduring loyalty. By tailoring services to individual preferences and addressing various skin types, beauty salons can forge deeper connections with their clientele.

Leveraging cutting-edge technology, such as advanced skin analysis tools and AI-driven beauty consultations, salons can delve into the unique needs of each client. Detailed analysis and data-driven insights enable salons to provide bespoke skincare regimens and treatments, precisely matching the specific requirements of each customer.

This approach elevates the standard of service while creating a memorable and immersive client experience. From personalized product recommendations to customized treatment plans, every aspect of the salon visit is meticulously curated to cater to the individual, fostering a sense of exclusivity and indulgence.

By harnessing the power of customization and personalization, beauty salons can transcend traditional norms and establish themselves as pioneers in the industry. This not only attracts new customers but also cultivates a loyal customer base who value the attention to detail and personalized care offered by the salon. Ultimately, this strategy propels growth and sustains success in the competitive Indian salon market.

As a result, the beauty salon market continues to evolve and expand, driven by the strategic expansion of salon chains into previously underserved regions, ultimately benefiting both consumers and industry players alike.

Industry Overview: Restraints

Intense competition between major key players hindering the growth of the Indian beauty salon market, characterized by the clash between established chains and independent salons.This rivalry triggers price wars and exerts immense pressure on profit margins.

In cities like Delhi and Mumbai, where densely populated areas foster the proliferation of local salons, the competition escalates. The sheer abundance of options for consumers fuels this intense environment, challenging salon owners to distinguish their offerings effectively while sustaining profitability amidst the price-driven market dynamics.

The prevalence of similar services across numerous local salons compounds the challenge of differentiation. In such a saturated landscape, maintaining a unique value proposition becomes increasingly arduous for salon proprietors. Striving to stand out amidst this sea of competition necessitates innovative strategies and a keen understanding of consumer preferences.

Consequently, the relentless battle for market share not only heightens competitive pressures but also underscores the imperative for salon owners to continuously innovate and adapt to survive and thrive in this fiercely contested arena of the beauty industry.

INTERNAL CONTROL SYSTEMS ANDTHEIR ADEQUACY

Our company has implemented an internal control system tailored to its size and business nature. The scope and authority of the Internal Audit function are clearly defined within the organization. To preserve its objectivity and independence, the Internal Audit function reports directly to the Management and the management reports to the Chairman of the Audit Committee of the Board. This system provides reasonable assurance regarding the accuracy of financial and operational information, compliance with applicable laws, asset protection, and adherence to corporate policies.

Proper controls are in place and regularly reviewed to ensure transactions are authorized and accurately reported, and assets are safeguarded. The internal financial controls established are adequate and have been effectively operational throughout the year. Based on the Internal Audit reports, process owners take corrective actions in their respective areas, thereby enhancing the overall control environment.

FINANCIAL REVIEW

The Financial performance of the Company for the Financial Year 2023-24 is described in details in the Directors Report under the head overview of Companys financial performance.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Human capital is esteemed as a crucial resource and a cornerstone of our companys success. We firmly believe that our employees are the foundational pillars of our achievements. Acknowledging that our workforce is our primary asset, we understand that sustained growth depends on our ability to attract and retain top-tier talent. Our skilled and talented employee base plays an essential role in enhancing business efficiency, developing strategies, establishing systems, and driving our business forward.

We place significant emphasis on providing training and development opportunities for our team to enhance their skills and experiences, thereby enabling the company to meet its business objectives. To support this, we have established an in-house academy dedicated to train our technicians to uphold high efficiency and standards.

Moreover, we have implemented an Employee Stock Option Scheme (ESOP) with meticulously crafted guidelines to incentivize and enhance productivity at every level. This scheme is designed to bolster employee retention and nurture a deep-seated loyalty to the organization. By offering stock options, we aim to recognize and reward the dedication of our team, fostering a sense of ownership and long-term commitment. This strategic initiative is essential for securing our top talent, ensuring their continued engagement, and reinforcing a high-performance, competency-driven culture within the company.

KEY FINANCIAL RATIOS

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward looking statements and progressive within the meaning of applicable laws and regulations. The Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.